How to Have a Successful Business Partnership: 3 Steps
Thinking of establishing a Business Partnership? Read on to find out how to maximise your chances of having a successful one.
A business partnership exists where two or more people own and conduct the operations of a business together, sharing all the profits and liabilities of that business. At times, a partnership can be more difficult to operate than a sole proprietorship, and even a company, primarily because the decision-making power is shared between multiple people. This can become a challenge when the expectations of the other partners are not being met, and are not consistent with the views of other partners. However, there are ways to make sue that your venture operates as a Successful Business Partnership, and these should always be considered – even before the partnership begins.
Step 1: Understand Yourself and your Partner(s)
Before you begin a business partnership, make sure that you have a strong understanding of yourself, including your management style, your expectations and your limitations or weaknesses. Not only should you understand yourself, you should also have a strong understanding of your partner.
For example, understanding whether your management style will complement your partner(s) is important to establish an effective balance that will allow you to work on growing your business without unnecessary conflict. This does not mean that you will need to have the same management style as your partner(s), but you should take steps to ensure that they don’t clash.
It is also important to align your expectations with your partner(s) so that there are no misconceptions about the business, it’s operations or future plans. Ask your partner what their goals for the business are and where they see it going. This is where a business plan can be helpful, in that it will clarify the goals, operations and purposes of the business and heighten your chances of running a Successful Business Partnership.
However, it is also important to remember that expectations do not just exist in relation to the operations of the business, but they also arise in relation to how much work needs to be put in by each partner.
Step 2: Ensure that you have a Written Partnership Agreement
A partnership agreement governs the relationship between you and the partners in your business. Having this agreement is not necessary in order to form a Successful Business Partnership, but it is highly beneficial to create one to clearly define the boundaries of the partnership, set out each partners’ legal obligations, and assist with dispute resolution. When each partner clearly understands their role, it is less likely that disputes will arise. Further, when disputes do arise, written partnership agreements can remove uncertainty by providing clear guidelines on how to resolve conflict. If it comes down to it and the partnership needs to be dissolved, partnership agreements can provide for an exit strategy.
Step 3: Communicate and Plan for the Future of your Business Partnership
Often, people change their thinking or their interests over time. The most important thing to do is to be clear when that does happen and to openly communicate about such changes. Lack of open communication can lead to unresolved issues that may escalate. It may also be a good idea to schedule regular meetings to discuss the direction that the business is moving in and future plans.
Establishing a good foundation with your partner will help make the business partnership work. The key is to turn your mind to these steps before you embark on the business venture with others, be flexible, and plan for changes within the business partnership in the future. These will help provide a strong basis for the commencement and operation of a Successful Business Partnership.
Jackie is the Content Manager at Lawpath and manages the content team. She has a Law/Arts (Politics) degree from Macquarie University and is an admitted solicitor in the Supreme Court of NSW. She's interested in how technology can help shape the future legal landscape.